Co-option occurs when natural selection finds new uses for existing traits, including genes, organs, and other body structures. Genes can be co-opted to generate developmental and physiological novelties by changing their patterns of regulation, by changing the functions of the proteins they encode, or both. This often involves gene duplication followed by specialization of the resulting paralogous genes into particular functions. A major role for gene co-option in the evolution of development has long been assumed, and many recent comparative developmental and genomic studies have lent support to this idea. Although there is relatively less known about the molecular basis of co-option events involving developmental pathways, much can be drawn from well-studied examples of the co-option of structural proteins. Here, we summarize several case studies of both structural gene and developmental genetic circuit co-option and discuss how co-option may underlie major episodes of adaptive change in multicellular organisms. We also examine the phenomenon of intraspecific variability in gene expression patterns, which we propose to be one form of material for the co-option process. We integrate this information with recent models of gene family evolution to provide a framework for understanding the origin of co-optive evolution and the mechanisms by which natural selection promotes evolutionary novelty by inventing new uses for the genetic toolkit.